GST likely to have 3-rate structure in future: Bibek Debroy

Source :

Last Updated: Sun, Oct 28, 2018 13:18 hrs

New Delhi: The current four-slab GST rate structure is likely to be reduced to three as the process of rationalising India's new indirect tax regime proceeds further, the Prime Minister's Economic Advisory Council (PMEAC) Chairman Bibek Debroy said on Friday.

In his address at the launch here of "GST: Explained for Common Man" written by former Central Board of and Excise and Customs Chairman Sumit Dutt Majumder, the PMEAC Chairman noted that only very few countries that have implemented GST follow the principle of "dual GST" (Goods and Services Tax) whose "terminal role from an economists point of view is to have a single tax structure."

"Only a few countries have actually implemented GST," Debroy said.

"Only very few..two or three, including India, Canada and perhaps Australia have dual GST, while the rest have a single, unitary tax," he said.

Noting that a multiple tax structure makes GST implementation an "extremely difficult" process, he said the consensus on this overhaul of India's indirect tax regime was that the reform, although not perfect, should be rolled out and "it (GST) could be tweaked as we go along".

He pointed out that countries had taken as long as 10 years for their GST systems to stabilise.

"Going ahead, we in India will probably have three rates, instead of the current four," Debroy said.

In his address earlier, former President Pranab Mukherjee recalled how the "biggest reform of India's indirect tax system" had been proposed by the previous Finance Minister P. Chidamabaram in the Union Budget in 2006, but the process of political consensus building had stalled it around 2011.

He said that cooperative federalism had finally been institutionalised through the Committee of State Finance Ministers, which later became the GST Council that has taken all its decisions unanimously in its 30 meetings held so far since new tax regime was rolled out in July 2017.